Options for Funding Second Investment Property

[Daniel Kohn]

Hey everyone!

First ever post on the BP Forums, so exciting! Have listened to many podcasts, and figured it was time to get in on these forums. My wife and I have a 2 family property that is currently owner occupied, and have owned it since early 2021. We are thinking of taking the next step in our investment journey, but are torn on which direction to go. We used an FHA loan on this multi family, and are interested in knowing what our options are for funding our second investment property. We are open to moving in there if needed if it means being able to obtain it for less money down, and are currently saving regardless of the options we have. Any insight would be greatly appreciated in helping us take this next step!

Thanks,
Daniel

[Doug Smith]

Hi Daniel, I think the big question is "how much cash do you have to inject?" I just answered another question about the cruel math trick that happens when you use Fannie/Freddie/FHA to finance multiple properties. At some point pretty quickly, most people cease to qualify because of how those types of loans calculate Debt to Income ratios. We started flipping and then moved into longer term holds. You might have to considering flipping to generage the down payment necessary to keep scaling. Something like flip a couple to generate capital, then hold one, flip two, hold one, ect. That's actually how we did it. Doing only rentals without doing somethig to generate the next down payment can make it hard to scale. That's actually how we do it. I hope it goes well for you.